Building oil refinery could take up to decade
By Dave Dreeszen and Michele Linck Journal staff writers | Posted: Friday, June 15, 2007
If Hyperion Resources ultimately decides to build an $8 billion oil refinery in Union County, S.D., it likely would take a decade or more before it would be up and running, company officials and energy experts confirmed Thursday.
Construction alone on the massive energy center would take four years, Hyperion said. Before it could break ground, however, the Texas-based energy firm would need to clear a maze of regulatory and zoning hurdles, estimated to drag out over four or five years.
Hyperion spokesman Eric Williams declined to discuss how long the company expected to spend in the permitting process but acknowledged, "Four years is not out of line.
"We will have all the necessary permits in place before we start construction,'' he said Thursday.
Hyperion hopes to complete its site selection in the next 12 months. Ending months of speculation about the so-called Gorilla project, the little-known privately held company on Wednesday confirmed a tract of land northwest of Elk Point is a finalist for its "green energy center'' with a capacity to refine 400,000 barrels of crude oil a day from Canada into low-sulfur gas and diesel fuel.
Project executive Preston Phillips said Wednesday the company also is considering "alternative sites'' in a "couple other'' Midwest states that were not identified.
Before Wednesday, only a handful of local and state leaders knew the identity of the mysterious entity that had been optioning big chunks of rich farmland in Union County.
Phillips said Wednesday the company has options on about 5,000 acres in Union County. Of that, about 2,000 acres -- about the size of 1,512 football fields -- would be needed for the refinery itself.
Williams declined to say if Hyperion or its representatives have optioned land at any of its alternative sites. South Dakota officials say they do not know if any competing state is as far long in the process as the Union County site.
"They have not told us they have optioned any other land, but that certainly does not mean they have not,'' Richard Benda, secretary of South Dakota Tourism and State Development, said. "It certainly makes logical sense that they have.''
Phillips noted Hyperion still is conducting engineering and scientific studies to determine if the Union County site is feasible for the project. At Wednesday's news conference, he was asked whether the company would be persuaded to build in extreme southeast South Dakota if all the data came back favorable.
"I can't answer that question right now,'' he replied. "I think we're still early in the process.''
When completed, the Hyperion energy center would employ 1,800 people at hourly wages averaging $20 to $30. Building the massive plant would create an average of 4,500 construction jobs over a four-year period, with a peak of about 10,000 workers.
The last U.S. refinery was built in 1976. Industry analysts blame the lack of new construction on prohibitvely strict and expensive environmental regulations and the extremely slow return on the multibillion-dollar investment.
A $3.5 billion green energy refinery similar to the one envisioned by Hyperion has been under development near Yuma, Ariz., since 1999. It took Arizona Clean Fuels Yuma nearly four years to get its main air quality permit, spokesman Ian Caulkins said. Now, the company is looking to complete the regulatory process and finalize its financing in hopes of breaking ground on the project next year or in early 2009, he said.
"This is the poster child for why you can't build one in this country,'' American Petroleum Institute spokesman John Kerekex said of the Yuma project. "These guys have been trying forever to build a refinery in a place where peole say they want it. (The delays) are part environmental, changes in regulations, changes in administrations, changes in finances and economics.''
In addition to that, the site is a small part of a large land transfer between a drainage district and the federal government that is now being challenged by an American Indian tribe.
The Arizona plant plans to refine 150,000 barrel of oil per day, compared with the 400,000 barrels planned for the Hyperion refinery.
Hyperion intends to supply its refinery with crude oil from the Canadian oil sands in Alberta. If the Union County site is selected, Phillips said, Hyperion would have several options for getting the crude to the refinery, which would be big enough to merit its own dedicated pipeline.
Another potential option is the proposed Keystone pipeline, which is proposed to pass through eastern South Dakota. The pipeline would cross the Missouri River near Yankton, which is just a half-hour drive from the Hyperion site. But Jeff Rauh, a spokesman for Trans-Canada, the utility giant planning the Keystone project, said Hyperion has not spoken to his firm about supplying oil for a potential Union County refinery.
Keystone already has contracts for nearly all of the 435,000 barrels of crude per day its pipeline would move from Alberta to refineries in Illinois and Oklahoma, he said. The daily volume could be expanded to about 590,000 barrels, but Rauh said the company is talking to other new customers. If and when a Union County refinery would be built, the added capacity might be spoken for as well, he said.
"Even if Elk Point is selected, they have a a lot of ground to cover before they end up with a refinery that is ready to accept oil,'' he said.
Construction alone on the massive energy center would take four years, Hyperion said. Before it could break ground, however, the Texas-based energy firm would need to clear a maze of regulatory and zoning hurdles, estimated to drag out over four or five years.
Hyperion spokesman Eric Williams declined to discuss how long the company expected to spend in the permitting process but acknowledged, "Four years is not out of line.
"We will have all the necessary permits in place before we start construction,'' he said Thursday.
Hyperion hopes to complete its site selection in the next 12 months. Ending months of speculation about the so-called Gorilla project, the little-known privately held company on Wednesday confirmed a tract of land northwest of Elk Point is a finalist for its "green energy center'' with a capacity to refine 400,000 barrels of crude oil a day from Canada into low-sulfur gas and diesel fuel.
Project executive Preston Phillips said Wednesday the company also is considering "alternative sites'' in a "couple other'' Midwest states that were not identified.
Before Wednesday, only a handful of local and state leaders knew the identity of the mysterious entity that had been optioning big chunks of rich farmland in Union County.
Phillips said Wednesday the company has options on about 5,000 acres in Union County. Of that, about 2,000 acres -- about the size of 1,512 football fields -- would be needed for the refinery itself.
Williams declined to say if Hyperion or its representatives have optioned land at any of its alternative sites. South Dakota officials say they do not know if any competing state is as far long in the process as the Union County site.
"They have not told us they have optioned any other land, but that certainly does not mean they have not,'' Richard Benda, secretary of South Dakota Tourism and State Development, said. "It certainly makes logical sense that they have.''
Phillips noted Hyperion still is conducting engineering and scientific studies to determine if the Union County site is feasible for the project. At Wednesday's news conference, he was asked whether the company would be persuaded to build in extreme southeast South Dakota if all the data came back favorable.
"I can't answer that question right now,'' he replied. "I think we're still early in the process.''
When completed, the Hyperion energy center would employ 1,800 people at hourly wages averaging $20 to $30. Building the massive plant would create an average of 4,500 construction jobs over a four-year period, with a peak of about 10,000 workers.
The last U.S. refinery was built in 1976. Industry analysts blame the lack of new construction on prohibitvely strict and expensive environmental regulations and the extremely slow return on the multibillion-dollar investment.
A $3.5 billion green energy refinery similar to the one envisioned by Hyperion has been under development near Yuma, Ariz., since 1999. It took Arizona Clean Fuels Yuma nearly four years to get its main air quality permit, spokesman Ian Caulkins said. Now, the company is looking to complete the regulatory process and finalize its financing in hopes of breaking ground on the project next year or in early 2009, he said.
"This is the poster child for why you can't build one in this country,'' American Petroleum Institute spokesman John Kerekex said of the Yuma project. "These guys have been trying forever to build a refinery in a place where peole say they want it. (The delays) are part environmental, changes in regulations, changes in administrations, changes in finances and economics.''
In addition to that, the site is a small part of a large land transfer between a drainage district and the federal government that is now being challenged by an American Indian tribe.
The Arizona plant plans to refine 150,000 barrel of oil per day, compared with the 400,000 barrels planned for the Hyperion refinery.
Hyperion intends to supply its refinery with crude oil from the Canadian oil sands in Alberta. If the Union County site is selected, Phillips said, Hyperion would have several options for getting the crude to the refinery, which would be big enough to merit its own dedicated pipeline.
Another potential option is the proposed Keystone pipeline, which is proposed to pass through eastern South Dakota. The pipeline would cross the Missouri River near Yankton, which is just a half-hour drive from the Hyperion site. But Jeff Rauh, a spokesman for Trans-Canada, the utility giant planning the Keystone project, said Hyperion has not spoken to his firm about supplying oil for a potential Union County refinery.
Keystone already has contracts for nearly all of the 435,000 barrels of crude per day its pipeline would move from Alberta to refineries in Illinois and Oklahoma, he said. The daily volume could be expanded to about 590,000 barrels, but Rauh said the company is talking to other new customers. If and when a Union County refinery would be built, the added capacity might be spoken for as well, he said.
"Even if Elk Point is selected, they have a a lot of ground to cover before they end up with a refinery that is ready to accept oil,'' he said.
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hope for future wrote on Jan 25, 2008 10:18 AM:
Ravi wrote on Jun 15, 2007 9:37 PM:
former IowaBoy wrote on Jun 15, 2007 9:05 PM:
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Just the facts jack wrote on Jun 15, 2007 4:55 PM: